Pound falls lower and Hits a record low against the Euro

Sterling's slump deepens as recession looms
By Edmund Conway, Economics Editor

Labour's sterling crisis is intensifying with the pound slumping to a new 16-year low.
The fall was triggered by an OECD warning that Britain is already in recession and the Government's pledge to spend £600m bailing out the housing market.

The pound, which has been tumbling in the past month, dropped to a new record low against the euro and hit a 2½-year low against the US dollar as foreign exchange traders continued to sell out of their sterling investments.

In early morning trading today it almost fell to $1.77 and the pounds to euros exchange rate was at 81.42p. The declines took sterling to 88.5 against a basket of other currencies - the worst overall level since the aftermath of Black Wednesday in 1992.

The falls came after the Organisation for Economic Co-operation and Development warned yesterday that Britain is in the first throes of recession. The Paris-based OECD became the first major forecaster to declare explicitly that Britain is in a technical recession - where the economy contracts for two consecutive quarters.

To make matters even more uncomfortable for Gordon Brown, it said Britain is the only major economy facing recession in the next six months. The Prime Minister had claimed previously that the UK was well placed to withstand the downturn.
The OECD said the economy will shrink by 0.2pc by the end of the year - the worst performance since the recession of the early 1990s.

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Bye for now

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